Regular FP2P readers will be (heartily sick of) used to me banging on about the importance of ‘killer facts‘ in NGO advocacy and general communications. Recently, I was asked to work with some of our finest policy wonks to put together some crib sheets for Oxfam’s big cheeses, who are more than happy for me to spread the love to you lot. So here are some highlights from 8 pages of KFs, with sources (full document here: Killer fact collection, June 2014).
I’m definitely not a stats geek, but every now and then, I get caught up in some of the nerdy excitement generated by measuring the state of the world. Take today’s launch (in London, but webstreamed) of a new ‘Global Multidimensional Poverty Index 2014’ for example – it’s fascinating.
This is the fourth MPI (the first came out in 2010), and is again produced by the Oxford Poverty and Human Development Initiative (OPHI), led by Sabina Alkire, a definite uber-geek on all things poverty related. The MPI brings together 10 indicators, with equal weighting for education, health and living standards (see table). If you tick a third or more of the boxes, you are counted as poor.
In April 2013, the World Bank Group endorsed two ambitious goals: (1) to end extreme poverty by 2030, and; (2) to promote “shared prosperity” by boosting the incomes of the poorest 40 percent of the population in every country. The introduction of the second goal marked a shift in the World Bank Group’s poverty reduction mission. Some might consider the goal #2 to constitute a refinement of a longer-standing -- albeit implicit -- emphasis on growth, widely considered a necessary condition for poverty reduction.
Is goal #1, ending extreme poverty by 2030, paramount and is goal #2 subsidiary to that first objective? On the other hand, if these two goals are prioritized equally, what might this mean for the extreme poor? What are the trade-offs between boosting the incomes of the bottom 40 percent in every developing country and ending extreme poverty globally?
The economics book that has launched a thousand blog posts, Thomas Piketty’s Capital in the Twenty-First Country, tells a grand story of inequality past and present. One would expect that a book on global inequality would have much to say about development. However, the book has limited relevance for the developing world, and the empirical data he marshals for developing countries is weak.
Piketty’s central story is that convergence in the developed world and slower population growth will leave us with a permanently modest economic growth rate (g). Coupled with a constant return to wealth (r), concentration of capital ownership, and high rates of savings among the wealthy, the low g leads to rising wealth inequality over a longish run—something like the second half of the 20th century.
A low-g future for the developed world is a mostly uncontroversial assumption. (He assumes future GDP per capita growth of 1.2 percent for the U.S.) But Piketty draws conclusions for the world as a whole, and we are a long way from global convergence. As Branko Milanovic noted in his review, catch-up growth could fend off Piketty’s inequality dystopia for some time.
Guest post from Jon Lomøy, Director of the OECD Development Co-operation Directorate (DCD)
Official development assistance – or aid – is under fire. In The Great Escape, Angus Deaton argues that, “far from being a prescription for eliminating poverty, the aid illusion is actually an obstacle to improving the lives of the poor.”
Yet used properly, “smart aid” can be very effective in improving lives and confronting the very issue that Deaton’s book focuses on, and which US President Obama has called the “defining challenge of our time”: rising inequalities.
As a recent UNDP report shows, more than three-quarters of the global population lives in countries where household income inequality has increased since the 1990s. In fact, today many countries face the highest inequality levels since the end of World War II.
There is clearly moral ground for arguing that it is unjust for the bottom half of the world’s population to own only as much as the world’s richest 85 people. Above and beyond this, however, academics, think tanks, and international organizations such as the OECD have found that rising inequalities threaten political stability, erode social cohesion and curb economic growth.
It is not surprising, then, that reduction of socio-economic inequality has moved to the centre of global discussions on the post-2015 goals. The OECD, responsible for monitoring official development assistance (ODA) and other financial flows for development, is complementing these discussions by exploring ways to better use existing financial resources – and mobilise additional ones – to promote inclusive and sustainable development. This includes redefining what we mean by ODA, as well as looking at the ways it can best be used to complement other forms of finance.
It seems that everyone is talking about inequality these days, and I, for one, am happy to see this issue at the forefront in the development discussion.
We can look at inequality in a number of ways, which are not unrelated. One of the most visible types of inequality on the radar is inequality of outcomes — things like differences in academic achievements, career progression, earnings, etc. — which, in and of themselves, are not necessarily bad. Rewarding an individual’s effort, innate talents and superior life choices can provide incentives for innovation and entrepreneurship, and can help drive growth.
However, not all inequalities are “good.” When inequality perpetuates itself because those born poor consistently do not have access to the same opportunities as those born rich, what emerges is a deep structural inequality that is bad for poverty reduction, bad for economic growth, and bad for social cohesion. How pervasive are these deep inequalities? Much more than we would like. Indeed, when we examine what is happening in many countries around the world today, we find large and persistent, even growing, gaps in earnings between rich and poor. And we find that those who start out in poverty or are part of a disadvantaged group tend to remain there, with little opportunity to work their way out.
How do we explain this, and what can we do to tackle it? We need to take a step back and look at where this inequality originates, and that is where the concept of equality of opportunity comes in to play. This concept broadly refers to access to a basic set of services that are necessary, at the minimum, for a child to attain his or her human potential, regardless of the circumstances — such as gender, geographic region, ethnicity, and family background — into which he or she is born. Too often, access to such basic services like electricity, clean water, sanitation, health care and education is much lower among children born into circumstances that place them at a disadvantage. Children from disadvantaged groups thus set off on an unequal path from day one, which curbs their opportunities and potential into adulthood.